China Enforces Daily Trading Limits Amid U.S. Trade Tensions

In response to the intensifying trade war with the U.S., Chinese stock exchanges have introduced daily restrictions on net share sales by hedge funds and large retail investors. This move aims to stabilize Chinese markets amid escalating tariffs imposed by both nations.

Amid escalating trade tensions with the United States, Chinese stock exchanges have imposed strict daily restrictions on net share sales by hedge funds and large retail investors. Four sources revealed on Friday that these measures have been implemented through verbal warnings from brokerages, setting a soft limit of 50 million yuan ($6.83 million) on daily net sales by these investors.

Failure to adhere to these restrictions could result in the suspension of trading accounts by the exchanges. Although the Shanghai and Shenzhen stock exchanges declined to comment, brokerages have been instructed to monitor transactions closely. This policy is part of China's broader strategy to stabilize its stock markets amidst the trade war, backed by interventions from state funds and the purchase of shares by listed companies.

While President Trump has imposed hefty tariffs of up to 145% on Chinese goods, China has responded by raising tariffs on U.S. imports to 125%. Despite the turbulent global market conditions, the restrictions have effectively shielded Chinese stocks from drastic sell-offs, contributing to a recovery on Friday that mitigated the week's losses. Observers note that compliance with these measures aligns with state interests, and if market conditions worsen, the daily sales limits could be tightened further.

(With inputs from agencies.)